Question

Colonial funds claims to have a bond fund which has maintained a mean share price of $15.00. They claim that the standard deviation of the share price is 0.24. To test this claim, the investor randomly selects 16 days during the last year. He finds an average share price of $14.80 with a standard deviation of 0.171. Can the investor conclude that the share price of the bond fund varies by less than colonial funds claims at a=0.025?

Step 1 of 5: State the hypotheses in terms of the standard deviation. Round the standard deviation to four decimal places when necessary.

Step 2 of 5: Determine the critical value(s) of the test statistic. If the test is two-tailed, seperate the values with a comma. Round your answer to three decimal places.

Step 3 of 5: Determine value of the test statistic. Round your answer to three decimal places.

Step 4 of 5: Make the decision. Reject Null or Fail to Reject

Step 5 of 5: What is the conclusion? Sufficient evidence or not sufficient evidence

Answer 1

Step 1 of 5 : Hypothesis: Vs  

Step 2 of 5 : df=degrees of freedom=n-1=16-1=15

The critical value is ,

; The Excel function is , =CHIINV(0.975,15)

Step 3 of 5 : The value of the test statistic is ,

Step 4 of 5 : Decision : Here , the value of the test statistic does not ies in the rejection region.

Therefore , fail to teject Ho.

Step 5 of 5 : Conclusion : There is not sufficient evidence to conclude that the share price of the bond fund varies by less than colonial funds.